Panama Canal tensions flare over excess expansion costs

A dispute concerning payment for the Panama Canal expansion project prompted the Panamanian president to threaten to demand assistance from Italy and Spain in person; a Spanish official plans to travel to Panama for negotiations this weekend.

The Spanish government is attempting to resolve a dispute with Panama concerning the expansion of the Panama Canal.

Spanish Public Works Minister Ana Pastor plans to travel to Panama this weekend for discussions with Panamanian officials on how best to resolve a dispute between the builders and the Panama Canal Authority. Pastor's announced travel to Panama follows Panamanian President Richard Martinelli's threat to travel to Spain and Italy "to demand these governments take moral responsibility."

At issue is $1.6 billion in additional costs needed to complete the expansion, which is already nine months behind schedule.

The Spanish builder claimed that the additional expenses, totaling half the original contract, were the result of "unforeseen circumstances" but did not specify the cause. The builder informed the Panama Canal Authority that payment was due within twenty-one days and failure to pay in that time frame would result in suspended construction.

In response, the Authority said in a statement that it rejected such "pressure" and called for the builders to cover the excess costs or face "mechanisms from the contract that would allow the work to be completed."

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